Pattie Lovett-Reid: Survey finds 39% of Canadians can’t survive a financial emergency
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It has been a tough year as many of us struggle with economic concerns, health worries, and personal balance sheets that have been slammed by the pandemic.
According to a new survey from FP Canada, Canadians are feeling the financial pinch, with 39 per cent saying their bank accounts could not withstand a financial emergency.
In a perfect world, we would all have a financial plan, set realistic financial goals and feel confident about our financial future. However, according to FP Canada, 4-in-10 do not have a financial plan, and when it comes to getting through an emergency, 37 per cent said they rarely put money aside leaving them with very little wiggle room.
The survey also found fewer Canadians – 57 per cent compared with 67 per cent two years ago – are confident they will achieve their financial goals, 20 per cent rarely or never pay off their credit card each month, and 61 per cent rarely or never maximize their RSP contributions annually. I worry these statistics are more about lack of financial acumen then financial ability.
However, it all goes back to having a financial plan.
A financial plan is not only for the wealthy. I would argue it is the plan itself that allows households to be more resilient in difficult times. A balance sheet can highlight where corrective action is required, and can help you recover from any sort of financial set back a little more effectively.
Here are some of the benefits of a financial plan:
1. It provides a framework to set financial goals and can be insightful and even motivating, while putting pen to paper increases the level of commitment.
2. The plan can become your blueprint for taking action, such as topping up your RSP or making a bill payment, as examples. It can also be useful in decision making and an effective tool in the renewal process.
3. With a plan, you can also set performance standards, which can be effective in helping you to move forward with altered financial outcomes.
This week, I am hosting a three-day symposium for FP Canada, and theme may not surprise you: Resolve, resilience and renewal.
My interpretation is as follows:
1. Resolve: the ability to find a solution and decide firmly on a course of action.
2. Resilience: the capacity to overcome a difficult situation
3. Renewal: the replacing or repairing of something that has been broken down like our balance sheets.
As we move into 2021 with a focus on these three themes, remember while you can do it alone you do not have be alone. A financial planner can be hugely beneficial in helping to point you in the right direction.
Disclosure: Pattie Lovett-Reid is a certified financial planner with FP Canada.